Nation Online

CfSC asks govt to reduce income inequality

Malawi’s  Centre for Social Concern (CfSC) has asked government to reduce income inequality by regularly reviewing the minimum wage and expanding the pay as you earn (Paye) tax-free band.

In an interview on Monday, CfSC social conditions research programme officer Alex Nkosi said there was an overwhelming income inequality in the country mainly due to differences in wages.

“To ensure employees take home is increased, government must increase the Paye tax-free band and broaden its tax base by investing in the extractive industries, among others,” he said.

Nkosi asked government to build capacity of the Malawi Revenue Authority (MRA) so that it collects more taxes.

He noted that some people evade taxes because MRA does not have enough officers.

In a press statement released last week, CfSC said high levels of poverty, growing inequality and unemployment are the major challenges facing Malawi.

The statement says although the Integrated Household Survey 3 Report (IHS3 2012) shows a two percent decline in poverty rate, half of Malawi’s population is still poor. Malawi’s poverty rate stands at 50.7 percent.

CfSC says Malawi is one of the most unequal societies in the world with a Gini coefficient of 0.45, an indication that it is far from the perfect situation of zero Gini coefficient.

The body says although Malawi’s gross national product (GNP) has improved in the recent past, economic gains have not trickled down to the majority of Malawians as they are still wallowing in poverty.

The IHS3 2012 shows that the richest 10 percent of the population has per capita income of about K140 458 while the poorest 10 percent has a per capital income of K15 161 (about $44).